How Construction Companies Can Predict the Next 3 Months: A Practical Guide to Cashflow, Margins & Project Forecasting

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How Construction Companies Can Predict the Next 3 Months: A Practical Guide to Cashflow, Margins & Project Forecasting

Dec 4, 2025 | Blog

You can predict the next few months by combining a rolling cashflow forecast, project-level margin reporting, and a pipeline review that updates weekly. These three tools show what cash is coming in and going out, how profitable your projects actually are, and whether upcoming work will sustain your overheads — giving you clarity and control.

At Thomas Emlyn Ltd, this is the core of what we build for construction firms through our Virtual Finance Office (VFO) and Virtual Finance Director (VFD) services. Below, we break down exactly how construction companies can forecast the next 60–90 days with confidence.

What does “predicting the next few months” actually mean?

Short answer: It means knowing what profit, cash, and workload your business will have in the next 8–12 weeks — before problems hit your bank account.

Most construction owners operate reactively. They know what’s happening on site this week, but not whether:

they’ll run out of cash next month,
a project is heading toward a margin drop, or
the pipeline is too quiet (or too busy) for their current overheads.

Predictive visibility solves all three.

At Thomas Emlyn Ltd, we use the same forecasting methodologies recommended by the Chartered Institute of Management Accountants (CIMA) and aligned with UK GAAP standards for construction.

What data do I need to predict the next few months?

Short answer: You need three data streams: project costs, cash timing, and pipeline value.**

1. Project-Level Cost Data

Break down:

labour (PAYE + subcontractors),
materials,
plant,
variations,
retentions.

Example:
A client had £280k of revenue due on a job, but a cost review showed labour was tracking 18% above budget. The early warning allowed them to renegotiate scope before the job went negative.

2. Cash Timing (Not Just Numbers)

Cashflow prediction in construction is about timing, not just totals.
Key factors:

client payment terms (often 30–45 days),
CIS deductions,
VAT quarter timing,
subcontractor pay cycles (weekly/fortnightly).

3. Pipeline Data

What projects are:

quoted,
won (awaiting start dates),
ongoing,
completing soon.

This determines how strong the next 3–6 months will be.

How to create a simple 90-day construction forecast

Short answer: Use a rolling 13-week cashflow, a margin-by-project dashboard, and a pipeline tracker updated weekly.**

Below is the exact framework we teach inside Thomas Emlyn Ltd’s Virtual Finance Office.

Step 1: Build a 13-week cashflow

This is the most powerful financial tool a construction company can use.

Include:

weekly client receipts
subcontractor payments
PAYE
CIS
VAT
materials
overheads (fuel, insurance, software, rent)

We often build a version in Fathom or Xero Projects, depending on the business.

Practical example:
A roofing firm believed they were profitable but felt “skint every month.”
Their 13-week forecast revealed:

£72k of payments landed in the same week every month (PAYE + suppliers)
£115k of client receipts landed only once a month
They were profitable on paper but cash-poor in reality.

The fix: move two clients to fortnightly invoicing and introduce staged billing.
Result: £34k steady working capital buffer created within 10 weeks.

Step 2: Review project margins weekly

Forecasting becomes easy when you know:

expected margin,
actual margin,
projected margin at completion.

At Thomas Emlyn Ltd, we track this weekly using a dashboard that flags:

labour overruns,
material hikes,
variations not invoiced,
retention risk,
client delays that impact cash.

Industry reference:
The Construction Leadership Council (CLC) recommends project-level reporting for risk reduction — something most SMEs still don’t do.

Practical example:
A groundworks company had a job budgeted at 24% margin.
Weekly tracking showed it slipping to 16%.
We identified the problem: subcontractor day rates creeping up without updated quotes.
A switch to fixed-price labour restored the margin on the next three jobs.
Result: £68k of margin protected over the quarter.

Step 3: Maintain a live 6-month pipeline

Your next three months depend on what’s starting soon — not just what’s finishing.

Include in your pipeline:

tenders submitted,
tenders won,
contracts signed,
job start dates,
estimated labour requirements.

Example dashboard snippet:

Pipeline Stage	Value	Probability	Weighted Value
Quotes out	£420,000	30%	£126,000
Won – not started	£600,000	90%	£540,000
Work in progress	£380,000	100%	£380,000

Weighted values show what’s likely to land, not just headline numbers.

This helps ensure overheads (admin, managers, yard, vehicles, financing) are covered months in advance.

Step 4: Forecast labour needs

Construction forecasting isn’t just about cash. It’s about people.

Questions to ask:

Do you have enough labour for next month’s jobs?
Too much?
Should you use subcontractors or PAYE?
Do you need to schedule training or certification renewals?

Labour forecasting alone prevents more margin loss than almost any other tool.

Step 5: Stress-test your next three months

Short answer: Run 3 versions — best case, expected case, worst case.**

This is the same method used by Tier 1 contractors and recommended by RICS.

At Thomas Emlyn Ltd, we model:

delayed payments,
reduced pipeline conversion,
material price rises,
unexpected repairs or plant hire costs.

When clients see the worst case, they often adjust instantly — sometimes avoiding a crisis completely.

Why does forecasting matter so much in construction?

Short answer: Because the UK construction sector has unpredictable cashflow and tight margins — forecasting protects you.**

Construction has:

long payment cycles,
retention delays,
variations that drag on,
subcontractors who want paying before you get paid,
rising material costs.

A three-month forecast turns chaos into calm.

It lets you:

negotiate better supplier terms,
stage invoice clients sooner,
build cash reserves,
hire (or avoid hiring) at the right time,
protect profit from creeping costs.

What tools does Thomas Emlyn Ltd use to help construction firms forecast?

Our Virtual Finance Office (VFO) and Virtual Finance Director (VFD) services build a forecasting system tailored to construction realities.

Typical stack:

Xero for accounting
Xero Projects for job costing
Fathom for forecasting and reporting
Custom-built 13-week cashflow in Google Sheets
Labour utilisation tracker
Pipeline tracker (probability-weighted)
Monthly finance meeting with directors

In many cases, we take businesses from “financial firefighting” to 3–6 months of total visibility within 30–60 days.

How to read your forecast and make decisions from it

What to check each week:

Cash low points — do you need to speed up invoicing?
Pipeline gaps — should you quote more, price tighter, or widen your niche?
Labour shortfalls — will you need subcontractors?
Labour excess — can you rearrange teams?
Margin drift — are you over budget on labour or materials?
Overheads vs pipeline — will next month’s work cover salaries and fixed costs?

This is where most construction owners say, “I finally feel under control.”

FAQ: Common Questions From Construction Business Owners

1. How accurate can construction forecasting really be?

Forecasts aren’t perfect — but they’re powerful.
Most SMEs using the Thomas Emlyn VFO model achieve 85–92% forecast accuracy over 90 days.
The key is weekly updates and job-level data, not annual budgets that gather dust.

2. Do I need special software to forecast next quarter?

No. Many firms start with Google Sheets.
Software like Xero Projects or Fathom improves speed, automation, and clarity — but it’s not essential.
The quality of your data is more important than the tools.

3. What if my cashflow is unpredictable because clients pay late?

Late payment is common in UK construction.
That’s why our forecasting model includes:

risk-adjusted payment dates,
invoice batching strategies,
staged billing,
and credit control processes aligned with Prompt Payment Code standards.

Forecasting doesn’t remove late payments — but it helps you prepare for them.

4. Can Thomas Emlyn Ltd build this system for me?

Yes.
Through our Virtual Finance Office or Virtual FD service, we build and run your forecasting system so you can focus on running sites.
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